THIS WEEK'S MUTUAL FUND STORIES

A time-worn adage about the wide gulf between Wall Street and Main Street tells of the country bumpkin on a visit to the big city whose urban cousin escorted him to the harbor to marvel at a grand flotilla of yachts.

"Here are the stockbrokers' yachts," the cousin said proudly, gesturing toward a parade of gleaming vessels. He pointed to another line of equally stunning boats. "And here are the bankers' yachts."

The country fellow surveyed this majestic picture, then turned to his cousin and asked, "Where are the customers' yachts?"

Some investors might find an answer to that question in this week's lead story, "Lazy Portfolios -- Boring Midyear Winners!"

Columnist Paul B. Farrell isn't shy about taking both Wall Street and the mutual fund industry to task for fees and practices he considers outrageous. In his latest assault, Farrell shows how to improve your chance to go one up on Wall Street with the help of low-cost, highly diversified index funds.

These "Lazy Portfolios," as Farrell calls them, aren't exciting; discussing them won't command a room. But over time, these ready-to-drive vehicles have delivered above-average gains, and their cheapness allows investors to keep more of what they make.

Other stories look at whether you should invest in a poorly performing fund from a top money manager, and profile a pair of highly regarded Legg Mason money managers -- one who's battling a slump, another who is coming back after a multiyear absence.

Then read one international fund manager's views on Chinese stocks, check out a leading market strategist's predictions about U.S. and international stocks, and see why one forecaster is cautious about the energy sector. Plus, Chuck Jaffe separates myth from reality in the merger of two Janus funds, on this week's Mutual Funds page.

And here are the pirates' yachts ....

Jonathan Burton, investments editor

Lazy portfolios -- boring midyear winners

Dull, boring snoozers. Yep, that's our five "Lazy Portfolios!" When I mention them to my buddies at the Pismo Beach Athletic Club they yawn and shake their heads: "Yeah lazy, but no fun!" My comeback: "If you want to gamble, go to Vegas. See Paul Farrell.

INVESTMENT STRATEGIES

Patience needed when a top fund slumps

When a top mutual-fund company allows investors back into one of its offerings, but the fund's return is poor, should you invest? See Mutual Understanding.

All-star's break

Baseball has its all-star break, and so apparently does mutual-fund manager Bill Miller. The all-star skipper of Legg Mason Value Trust is stuck in a deep slump. See full story.

Bearish bets

Geopolitical risk, weak corporate earnings and a slowing economy would give many investors pause, but short-sellers who profit when stocks decline might be drawn to several new exchange-traded funds that promise to double their money. See ETF Investing.

Fidelity favors heavyweight financial stocks

Against the backdrop of rising interest rates and a flattish yield curve, the financial service-oriented Fidelity Select funds are looking to large financial institutions. American International Group, JP Morgan Chase, and Wells Fargo are favorites. See Guru's Corner.

The East is green

Contrary to an old Chinese communist song, the East isn't red anymore. It's green -- as in the color of money. Growth in Asian economies like China, South Korea and India isn't new. But neither is it slowing, said fund manager Frederick Jiang, and for investors with an eastward view, he added, the good times could be getting better. See The Stockpickers.

A star fund manager's next act

Among the more intriguing aspects of Legg Mason Inc.'s newly streamlined mutual fund operation is the return of a veteran stock picker to retail fund management. See full story.

MARKET OUTLOOK

Stocks to travel bumpy road

Stock prices are likely to remain choppy as corporate earnings growth and consumer demand slows globally, but both U.S. and international markets should finish the year with modest gains, the head of Merrill Lynch's asset-management unit said. See FundWatch.

Rocky markets rattle mutual-fund companies

Several leading mutual-fund companies are scheduled to issue second-quarter earnings results next week, and analysts expect slower profit growth in the wake of stock-market declines worldwide and lighter cash flows from investors. See full story.

More pain at the pump

Tobin Smith of Change Wave Research says investors need to be much more cautious now about energy stocks. See Personal MarketWatch.

COMMENTARY AND OPINION

Orion's belt

Investment companies sometimes bury their mistakes, killing off their evil spawn, the funds that never produced good results or which once attracted attention but have since fallen and can't get up. But when Janus unveiled plans last week to kill its Olympus fund by merging it into Janus Orion, industry watchers did a double take. See full story.

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